How would the departure of the UK from the European community impact upon SMEs?

In October 2014, Britain was told it must pay an extra €2.1bn (£1.7bn) into the European Union budget by the end of December because the UK economy is doing better relative to other European economies. This raised again the question mark over Britain’s future in Europe.

In the November 2014 Business Barometer survey, our panel of UK small business owners and business advisers were asked to what extent the departure of the UK from the European community would impact upon their business.

The responses from small business owners were as follows:

To what extent do you think the departure of the UK from the European community would impact upon your business?

It will have a substantial positive effect

1.9%

It will have some positive effect

3.8%

It will have no effect

35.8%

It will have some negative effect

41.5%

It will have a substantial negative effect

13.2%

Don’t know

3.8%

UK business advisers were asked about the impact of a departure from the EU on SMEs:

To what extent do you think the departure of the UK from the European community would impact upon the businesses that you advise?

It will have a substantial positive effect

1.4%

It will have some positive effect

5.6%

It will have no effect

22.5%

It will have some negative effect

36.6%

It will have a substantial negative effect

31%

Don’t know

2.8%

Panellist Michael Reid said: “Any barrier to trade with the EU would make life very much more difficult. Many businesses buy from EU countries because it is so much easier and cheaper to do so in terms of admin overhead and lack of import duties. Loss of this will be significant on cost. Just as UK companies buy preferably from the EU for the above reason so do EU companies buy from the UK. Loss of that customer base would be disastrous.”

Another adviser panellist commented: “Most of the businesses I am involved with provide to the local market or else to a global market (outside of the EU). This means that in or out of EU will have little impact upon them for day to day business. Exit from the EU may have more effect on the level of assistance they receive (and hence the level of engagement with business mentors) as EU funding will not be in place. However this should be able to be replaced by direct UK Government funding.”